Tether market cap goes below $2 billion for first time since February

in #crypto5 years ago

Tether continues to see selling.

Investors continue to pull money out of tether as controversies surrounding it abound.

After recently losing its peg at a dollar, the selling has only continued to increase, even though it is scratching and clawing its way back to regaining its $1 peg as we speak.

The market cap of tether is now below $2 billion for the first since February of 2018.

Just a few weeks ago, tether was trading with a market cap just under $3 billion.

(Source: https://coinmarketcap.com/currencies/tether/)

What is going on?

As was alluded to many times in recent posts, tether seems to have lost the confidence of some of its biggest supporters, which was evidenced by tether trading as low as $.92 just a few days ago.

More about that can be see here:

https://steemit.com/tether/@jrcornel/tether-starting-to-lose-its-peg

https://steemit.com/crypto/@jrcornel/crypto-are-we-seeing-real-buying-or-something-else

In the month of October, roughly 800 million tethers have been taken out of circulation and sent back to treasury.

A sign that investors no longer wish to hold the stable coin and instead would rather park their money else where.

The change of heart likely has to do with the banking troubles tether and bitfinex have been having, seemingly on a weekly basis.

Another possibility for the weakness as of late has to do with a whole host of other, more transparent, stable coins popping up over the past few months.

More about that can be seen here:

https://steemit.com/crypto/@jrcornel/coinbase-and-circle-partner-to-launch-usd-stable-coin

Tether buying back its own currency?

The retiring of 800 million tethers lead some to believe there has been a mass exodus out of tether by large clients, however, that may not be entirely the case.

(Source: https://www.ccn.com/tether-market-cap-goes-sub-2-billion-as-coinbase-stablecoin-steals-the-show/)

The likeliest scenario seems to be that tether itself is taking its own coins out of circulation when they are under a dollar.

It is something akin to a public company buying back stock when they feel their shares are under valued.

Tether can buy back their coins under a dollar and then keep them on the books priced at a dollar. Which ends up making a tidy little profit for the company when you are dealing in the hundreds of millions of coins.

This is also likely how they plan on bringing the peg back to a dollar.

Some are going so far as to speculate that this could be the start of tether getting out of the stable coin game altogether, though I think it is most likely the other two scenarios mentioned above.

Stay informed my friends.

Image Source:

https://coincentral.com/what-is-tether/

Follow me: @jrcornel

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Have we ever seen a coin go to $zero?

Not sure they go to zero, but I think they go to .0001 or so and then stop trading...

No surprise that to some extent Bitfinex buy their own currency.
Their choice is to buy it back or to default on it (their own debt).
Some people started to realize that it is worse fractional reserve banking than in the international system that they tried to hedge against.

How is it worse? They seeem to have the funds to back it up...

How is it worse? They seeem to have the funds to back it up...

At a discounted rate.
They took a loan at a negative interest.
Their clients thought that they parked their dollars ready to capitalize on an opportunity.
Parking rent turned to be higher than merely trading fees.

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The tether drama continues :) I don't fully understand the part of them buying the coins. What this means exactly. Are they burning them, or just change of ownership. In this case there should still be the same amount of tethers.

It looks like they have burned about half of them. The others are remaining in treasury for possibly re-issuance.

This is a mess on a big scale ... millions, almost billions of dolars mess...

Posted using Partiko Android

Actually the fact that tether seems to have the money on hand to buy them back on the open market makes it sound like it is really not a mess at all, at least to me.

There are alternatives emerging almost every week and if I were to sell some cryptos now I would choose USDC. I don't think though that tether will be taken out of the equation as a stable coin but I believe it will only be one among others in the near future. It's probably better to have options.

Yep I would too, we just need USDC accepted on more crypto exchanges.

The other question is where has all that market cap gone to as the other stablecoins like TUSD, DAI and GUSD have not seen proportional increases. Other than the bitcoin soike that weekend, we have not seen where that $700m has gone. It is hard to consider that they have left the market without impacting prices. I guess we will find out soon enough!

I think most of it is just sitting on the books of tether and bitfinex, since they likely are the ones doing most of the buying back of tether.

Hi dear cornel sir
Tether is currently downward movement but long term view it is best investment than othe investment.so WAREAN BUFFET strategy is like on TETHER 'buy low sell high'

Not likely. It is pegged to a dollar. There may be some arbitrage though for those that can buy it in the $.90's and sell it for $1.00

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